Village post office 'on edge of abyss', warns MP

Last updated at 16:21 30 November 2006

The village post office is on the edge of an abyss, a Labour MP warned as the Government came under fire over its plans for the network.

Labour's David Taylor, whose mother Eileen was a postmistress, said 80 per cent of the 8,000 "vital" businesses in rural areas would collapse without the Government's subsidy, which is due to end in 2008.

Chairman of the trade and industry select committee, Tory Peter Luff said the Government's policies were "accelerating changes to the Post Office."

For the Liberal Democrats, Ed Davey said the minister was trying to "muzzle an independent specialist watchdog and merge it with another body at the same time as proposing to cull rural post offices".

But junior trade minister Jim Fitzpatrick said £2 billion had been invested since 1999 and post offices were "an important part of British life, particularly in rural and deprived urban areas."

Among problems facing post office income is the planned withdrawal of the Post Office Card Account, used by millions to access pensions and benefits.

The Government is due to end its subsidy to the post office network in 2008.

Adam Crozier, the chief executive of Royal Mail, has said that the post office network could be run with only 4,000 offices, raising expectations that the subsidy could be reduced and many thousands of offices closed.

Mr Taylor said: "The village post office is on the edge of an abyss."

He added: "To survive, the rural network needs the lifelines of post office-based banking products, preference in the distribution of government services and an early White Paper to spell out a clear future framework.

"Do you think that you are doing enough to tackle that most acute of crises?"

Mr Fitzpatrick said: "The current position is unsustainable, with losses of £100 million per year, expected to rise to £200 million per year.

"Investment from the Government since 1999 has been £2 billion, including £150 million for the rural network which will continue until 2008.

"We know that POCA must have a successor, and that Government assistance will be required to maintain a viable national network.

"You will shortly be able to see the outcome of all the Government's efforts, particularly over the past six months."

In response to Mr Davey he added: "As I have experience of misquotations by you from our last meeting on a public platform, you will forgive me if I do not acknowledge the accuracy of what you have said.

"We are in the business of strengthening consumer protection, as will become plain in due course as the new arrangements are introduced."

He added that a statement would be made on the future of the Post Office before MPs break up for Christmas.